One of the biggest challenges we face to ensure a healthy and sustainable environment and contribute to carbon neutrality is to maximize usage of renewable energy, specifically when heating our homes. The majority of residential housing is still heated with outdated systems, often using polluting fossil fuels such as coal and oil.
The challenge involved in tackling this is made all the more clear by The European Green Deal1, which is a set of policy initiatives by the European Commission with the key aim of making Europe climate neutral in 2050 using green technology.
Heat pumps are beginning to play a crucial role in decarbonizing Europe, and in certain areas there has already been an impressive uptake. For example, heat pumps are the default heating system in Sweden2 and enjoy 50% of the market share in new builds in some European countries3.
However, in the whole of Europe, renewable heating via heat pumps represents only 10% of all heating systems installed annually4. This contrasts sharply with the EU Commission’s ambitious target by 2030: 40% penetration of renewables in heating and cooling5.
At Daikin, we see the solution will be to take 4 steps to decarbonizing residential heat, in order to achieve the EU Commission’s targets by 2030.
Step 1: Commit to enhanced new build rules on energy use
Over the years, following the EPBD directive6, all European member states have already put measures in place to ensure that new build houses and apartments have a better carbon performance by making an improved building envelope and the use of renewable energy mandatory. As a result, Daikin estimates that heat pumps already have up to 50% market share in new (single family) houses. The most polluting heating systems must be phased out. For example, as from January 2020 Austria no longer allows oil-based boilers to be installed in new homes and new built houses in the Netherlands are all off-gas-grid from 2020 onwards.
A considerable additional benefit of hydronic heat pumps is the ability to use it to cool as well heat, which is increasingly becoming a consumer requirement. This is partly due to the climate change effect, but also because of the higher insulation level built houses. In a standard set-up, when a boiler is installed, a second HVAC system needs to be installed in case cooling is desired. A reversible hydronic heat pump provides space heating and cooling in one system, thereby benefiting from a single investment
Step 2: Increase replacement rate
Today’s replacement rate is, on average, 1% of the total number of heating systems installed per year and meeting the minimum target would require that replacement ratio to double within the coming 10 years.
Substituting heating devices with more efficient ones will constitute a move towards reducing CO2 emission. The challenge however is to motivate EU citizens to choose renewable heating more often, thereby convincing those in the replacement market that heat pumps are an efficient, cost-effective and established solution.
Step 3: End fossil fuel incentives
Policy makers could avoid incentives for fossil fuels. Currently, direct or indirect incentives benefit oil or gas-based boilers, due to different taxation of heat pumps compared with boilers for instance7.
While doing this, we recognize renewable technologies also need a level playing field. The gap between today’s electricity and gas prices in many member states is too high to make a heat pump an economically attractive investment for EU citizens. In the short term, government incentives can help accelerate the transition to carbon-neutral heating and make heat pumps accessible to all Europeans, but in the longer term more balanced energy prices and a correct indication of the energy and carbon performance of a building need to be the end user motivations to invest in heat pump technology.
Step 4: Make renewable heating standard in replacement
At Daikin, we believe heat pump systems have to become the standard when replacing heating systems. It is a fact that heat pumps are increasingly capable of high efficiencies, even at lower outdoor temperatures. The hydronic heat pump technology has developed quickly in recent years, making it fit for any type of residential building in Europe whether it is for the new build market or the replacement market.
By increasing the share of green electricity to 60% of total EU electricity production, heat pumps will continue to increase their contribution to a decarbonized residential heating world.
At Daikin we’re excited and passionate about taking on the changing environment and playing a key role in bringing this innovative technology into people’s homes while ensuring all stakeholders, such as installers and architects, are on board.
We can do our bit as well by making installation as simple as possible through great design. Europe has the technology, the expertise and the investments to expand the heat pump market further. From single family to multi-family homes, from small to large commercial buildings and industrial plants, heat pumps today are ready to go mainstream.
All the signs are indicating that we need to act now! Let’s convince those in the replacement market that heat pumps are the future and increase awareness regarding energy, cost-efficiency and environment-related advantages.